Are you winning a Pyrrhic Victory running ads?

Are you winning a Pyrrhic Victory running ads?

A Pyrrhic Victory is a victory or success won with a great expense on the victor.

This expression came from King Pyrrhus of ancient Greece, who defeated the Romans in battle, which resulted in a large loss of soldiers, so much that they cannot continue to fight another battle.

In short, it’s a victory not worth winning.

Here are some Pyrrhic victory examples:

  • They won the strike, but lost their jobs.
  • The football team won the semi-finals, but the last scoring goal caused the main striker to sprain his ankle – thus having to forfeit the finals.
  • Adam finally won $50,000 in a single poker hand at the casino, but have lost $200,000 in the last 6 months trying.

Pyrrhic Victory in Digital Advertising

Pyrrhic victories in digital advertising occur when you’ve collected a lot of leads or customers through an ad campaign but spent so much on ads that your profit becomes too thin (or non-existent) for success.

I reflected on this a lot when running ads for D/M Summit. 

We were running ads, mostly on Facebook.

An ad we ran for D/M Summit

Here’s the thing. The cost of ads is only going to increase every day. Why? Because more and more businesses are using Facebook ads.

How To Avoid Pyrrhic Victories?

Be far-sighted.

Well, there are many ways & scenarios in which Pyrrhic victories can be avoided, but I’ll share how you can avoid it in digital advertising.

1 – Optimize the conversion rate of a landing page.

Assuming you spend $1 per visitor.

  • 1000 visitors to a landing page with 2% conversion gives you 20 new customers. (CAC is at $50)
  • 2000 visitors to a landing page with 2% conversions gives you 40 new customers. (CAC is at $50)
  • 1000 visitors to a landing page with 2.8% conversions gives you 28 new customers. (CAC is at $35.71)

The above is a simple calculation. But you immediately see that sometimes the answer isn’t in spending more, but to optimize the conversion rate of your landing page.

For DSM Summit, we used a combination of Google Analytics and video analytics to understand where to optimize conversions.

2 – Know your CAC limit when advertising

I’ve met many business owners who do not know the highest amount they can spend to acquire a customer, without going negative.

That’s CAC, customer acquisition cost. Simple, yet ignored in most ad campaigns.

If you have a product that earns you a profit of $100 per sale, you probably will be happy to spend up to $60 or more to acquire a sale.

That’s an oversimplification. Then again, my team, run ads without a budget cap. That’s because, all of us know as long as our ad campaigns are delivering conversions below our CAC limit, we’re in the positive zone.

3 – Do the opposite

In the world of digital advertising, it’s easy to get caught up following what the others are doing.

  • Most businesses are running ads on Facebook. Let’s run ads on Facebook too!
  • Lead form ads (on Facebook) seems to be working well for that company. Let’s try it too!

Sound familiar?

The problem with digital advertising is that most platforms are based on real-time bidding. That means, the more demand there is for an ad spot or targeting, the higher the cost will be for you.

What about advertising in platforms where demand is still relatively low? How about we use a different set of targeting that has low demand?

For D/M Summit, we experimented with different types of interest targeting on Facebook to achieve lower ad costs.

For example, let’s say we want to reach digital marketers, with our ad. Instead of targeting a highly competitive interest like ’email marketing’, we targeted ‘MailChimp’.

Besides lowering our ad cost, targeting a less crowded interest, here’s the other thing.

Not everyone who likes ’email marketing’ is a digital marketer. But as we go deeper, targeting MailChimp, although it’s a smaller audience, we can safely assume that people who like MailChimp are more likely to be digital marketers!

So hey, it’s your turn now.

If you’re currently running ads, take a step back to look for ways to avoid a Pyrrhic victory.

I hope the few pointers above helps. Feel free to comment below if you have more suggestions. And I hope you see you in D/M Summit.

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